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TMI Blog2020 (3) TMI 849X X X X Extracts X X X X X X X X Extracts X X X X ..... reby, made ineligible. The foundation of the confirmation of demand, charging of interest and the imposition of penalty is built upon sand - demand set aside - appeal allowed - decided in favor of appellant. - Service Tax Appeal No: 85988 of 2018, 85991 of 2018, 85992 of 2018, 85994 of 2018, 85995 of 2018, 85997 of 2018, 85998 of 2018 - A/85578-85584/2020 - Dated:- 13-3-2020 - HON BLE MR C J MATHEW, MEMBER (TECHNICAL) AND HON BLE DR SUVENDU KUMAR PATI, MEMBER (JUDICIAL) Shri Prakash Shah with Shri Mihir Mehta and Mohit Rawal, Advocates for the appellant Shri Bidhan Chandra, Additional Commissioner (AR) for the respondent ORDER PER: C J MATHEW The common issue for resolution in these seven appeals that are takeing for disposal together is the liability of interest, under rule 14 of CENVAT Credit Rules, 2004, arising on CENVAT credit that, admittedly, was taken even on such input services as are deployed for rendering of services that were exempt from tax under Finance Act, 1994 but reversed before utilisation. Concomitantly, the penalty imposed under rule 15 of CENVAT Credit Rules, 2004, read with section 11AC of Central Excise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T K Roll Road Pvt Ltd 1,50,07,692 31,94,93,732 4. An immediate controversy raised by the appellants is that, arising from the acknowledgement of this charge of tax liability as credit for the very first time in the return is pertaining to the half-year commencing in October 2013, the impugned orders erred in fastening liability of interest from 2010 instead of October 2013. This, of course, does not impact on the penal detriment which is quantified as the amount wrongly taken as credit but has implications in the context of the amendment effected in rule 14 of CENVAT Credit Rules, 2004 that enabled invoking of interest liability only on credit that was utilised. 5. We have heard the submissions made by Mr Prakash Shah Learned Counsel for appellants, appearing along with Mr Mehta and Mr Rawat, on the legality of charging of interest and imposition of penalty on credit, though admittedly taken without eligibility, that was reversed without being utilised. On behalf of the appellants, it was canvassed that mere entry in the books, without staking legally valid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Shree Bhagwati Steel Rolling Mills v. Commissioner of Central Excise [2015 (326) ELT 209 (SC)]. It was further argued that, for acknowledgement of credit, inclusion in records that were maintained in the normal course of business sufficed as clarified in circular no. 457/23/99-CX dated 20th May 1999. Decisions of the Hon ble High Court of Bombay in Commissioner of Central Excise, Pune-I v. GL V India Pvt Ltd [2015 (321) ELT 611 (Bom)], that of the Hon ble High Court of Chhattisgarh in Commissioner of Central Excise Customs, Raipur v. Vandana Vidyut Ltd [2016 (331) ELT 231 (Chhattisgarh), that of the Hon ble High Court of Madras in Commissioner of Central Excise, Chennai-IV v. Sundaram Fasteners Ltd [2014 (304) ELT 7 (Mad)] and that of the Tribunal in Balmer Lawrie Co Ltd v. Commissioner of Central Excise, Belapur [2017 (49) STR 331 (Tri-Mumbai)] were cited by Learned Authorized Representative to support his argument that, till the amendment effected in rule 14 of CENVAT Credit Rules, 2004, the interpretation afforded by the decision of the Hon ble Supreme Court in re Ind-Swift Laboratories Ltd permitted no latitude in escapement from interest liability. 7. It i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts to further taxation merely owing to physical absorption within the output. The operationalising of the scheme verbalises a mathematical equation; regrettably, the semantics, rendered complex owing to frailty of expression, overwhelms the simplicity of arithmetical addition and subtraction. By no stretch, can accumulated credit claim to acquire the status of legal tender or its surrogate, as a negotiable instrument , and the debit in such account is neither a monetisation for the Treasury nor representative of an obligation under the taxing statute that is forgone by executive fiat on the authority of legislative delegation. The looseness of drafting, if considered to be pivotal, in CENVAT Credit Rules, 2004 may well lead to a distortion of the scheme merely by being unjustifiably rigid. The nearest equivalent to unutilizable credit of taxes borne is monopoly currency that is of no use for man or beast except in the restricted context of the game. For the adjudicating authority to hypothesise, or to conjecture, a motive outside the scheme of taxation as justification for neutralizing and penalizing is to venture into uncharted and unknown territory beyond the scope of co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provider of the output service and the provisions of sections 11A and 11AB of the Excise Act or sections 73 and 75 of the Finance Act, shall apply mutatis mutandis for effecting such recoveries. and the immediate consequence of the decision of the Hon ble Supreme Court to decline the accruals arising therefrom to the exchequer by imposing charge of interest only in further restrictive circumstances of Rule 14. Recovery of CENVAT credit wrongly taken or erroneously refunded.- Where the CENVAT credit has been taken and utilized wrongly or has been erroneously refunded, the same along with interest shall be recovered from the manufacturer or provider of the output service and the provisions of sections 11A and 11AB of the Excise Act or sections 73 and 75 of the Finance Act, shall apply mutatis mutandis for effecting such recoveries. does not require further elucidation of legislative inent. 13. It merely suffices to consider the circumstances in which the intervention of the Hon ble Supreme Court was sought by Revenue and the proposition argued before us by citing rule 14 of CENVAT Credit Rules, 2004 as laying down declared law for charging of interest. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the happy consequences of the decision of the Hon ble Supreme Court. 15. This is not to suggest that the subsequent decisions of the Hon ble High Court of Chhattisgarh and of the Hon ble High Court of Bombay, as well is that of the Tribunal, should not be followed by us; however, it may be worthwhile to peruse the circumstances in which those disputes had their genesis. The issue in re Vandana Vidyut Ltd was the relegation of credit taken as mere paper entries which, according to the Tribunal, was not the same as utilization but overruled by the Hon ble High Court on evaluation that rectification by reversal came about only after issue of show cause notice. In re GL V India Pvt Ltd, the question of law was framed by Hon ble High Court of Bombay after taking note of the suo motu taking of credit by the assessee that, by itself, was unauthorized. In re Balmer Lawrie Co Ltd, the impugned goods were received at the premises of the assessee merely for storage, and entirely unrelated to the activities conferring eligibility to credit, which was held to be beyond the pale of CENVAT Credit Rules, 2004. Thus, we see an unbroken thread connecting the decision of the Hon ble Su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... privilege to go through the draft order prepared by my senior colleague and I fully concur with his findings. However, to bring more clarity to the issue concerning applicability of interest to CENVAT credit recovery, I would like to reiterate the findings given by me while deciding similar matter in the case of Nagpur Nagrik Sahakari Bank Ltd. Vs. CCE ST, Nagpur vide final order No. A/87763/2018 dated 26th October 2018 , the relevant portion which is reproduced as under:- 6. In order to appreciate the legality of the order imposing interest, it is imperative to have a look at Rule 14 of the Cenvat Credit Rules, existing then, which reads as under:- Rule 14. Recovery of Cenvat credit wrongly taken or erroneously refunded. - Where the Cenvat credit has been taken or utilized wrongly or has been erroneously refunded, the same along with interest shall be recovered from the manufacturer or the provider of the output service and the provisions of Sections 11A and 11AB of the Excise Act or Sections 73 and 75 of the Finance Act, shall apply mutatis mutandis for effecting such recoveries. A bare reading of the heading and the content of Rule 14 would revea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n and more particularly after the judgment passed by the Hon'ble Apex Court referred supra, it had amended the Rule with effect from 17.03.2012 by substituting taken or utilised wrongly with the words taken and utilised wrongly and thereafter also segregated both taken and utilised part from erroneous refund by bifurcating rule 14 into two clauses by way of making a distinction between taken wrongly but not utilised and taken and utilised wrongly . In the former case i.e. wrongly taken and not utilised Rule 14(1)(i) made it clear that in such a case the credit shall be recovered and in case of wrong utilisation, in view of Rule 14(1)(ii) such recovery shall be made with interest from the manufacturer or provider of service. 8. I have carefully gone through the order passed by the Hon'ble Apex court in UOI vs. Ind-Swift Laboratories Ltd. case referred above and also the decision of the Hon'ble High Court of Bombay reported in 2015 (321) ELT 611 on which heavy reliance has been placed by the ld. AR for the respondent department. In both the decisions, the aspect of interpretation of statute has been discussed and it has been held that the word or ..... X X X X Extracts X X X X X X X X Extracts X X X X
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